Panama Papers Tie More of China’s Elite to Secret Accounts

Panama Papers Tie More of China’s Elite to Secret Accounts
By MICHAEL FORSYTHEAPRIL 6, 2016



HONG KONG — At least three of the seven people on the Chinese Communist Party’s most powerful committee, including President Xi Jinping, have relatives who have controlled secretive offshore companies, the organization that has publicized a trove of leaked documents about hidden wealth reported on Wednesday.
The disclosures by the organization, the International Consortium of Investigative Journalists, risked new embarrassment for the Chinese authorities, already unnerved and infuriated by the organization’s leaks of the documents, known as the Panama Papers.
Chinese government censors have moved aggressively since the first release of leaked documents on Sunday to purge any media’s mention of them in China, going so far as to block Internet searches and online discussions that involve the words “Panama Papers.”
The documents, which came from Mossack Fonseca, a boutique Panamanian law firm that specializes in creating tax shelters and secretive corporations for wealthy clients, have jolted political leaders and other powerful figures around the world. But they are considered especially sensitive in China, where the Communist Party, under Mr. Xi, has pledged to eradicate corruption within its ranks and seeks to portray itself as a champion of equality, despite some of the world’s most glaring income disparities.
The information made public by the consortium on Wednesday included material on the Communist Party Politburo Standing Committee, the seven-member group, all men, that wields ultimate power in the country.
The daughter-in-law of Liu Yunshan, China’s propaganda chief, was once a shareholder and director of a company registered in the British Virgin Islands, and the son-in-law of Vice Premier Zhang Gaoli was a shareholder in three companies domiciled in the British tax haven, the consortium reported.
President Xi is the third member of the Politburo committee cited in the report as having a relative who controlled offshore companies. The ties of Mr. Xi’s brother-in-law, Deng Jiagui, to offshore companies have been known since 2012, when a Bloomberg News article about Mr. Xi’s family wealth detailed the business empire of Mr. Deng and his wife, Qi Qiaoqiao, the president’s sister.
The consortium’s review of the leaked documents found that Mr. Deng had acquired three additional offshore companies, well before Mr. Xi became China’s top leader and made a crackdown on corruption one of the centerpieces of his leadership.
The disclosures provide further insight into how China’s political elite has tapped into the global network of lawyers and wealth managers who, for a fee, can set up complex corporate structures that often have the effect of cloaking vast personal wealth.
It is not illegal for Chinese citizens to own companies offshore, and there are legitimate reasons for having one. Thousands of Chinese nationals have set up companies in offshore havens such as the British Virgin Islands and the Seychelles. Mossack Fonseca has more offices in China than in any other country, according to the company’s website.
Many of China’s most powerful families set up offshore companies during the administration of Hu Jintao, who preceded Mr. Xi as president and as leader of the Communist Party. Family members or close business associates of at least five of the nine men who served on the Politburo Standing Committee from 2007 through 2012 had links to offshore accounts, according to records reviewed by The New York Times.
It was during that period that Jia Liqing, the wife of Mr. Liu’s son, Liu Lefei, appears to have become the director and a shareholder of Ultra Time Investments, a company incorporated in the British Virgin Islands in 2009, according to the consortium's report. It is not clear what Ultra Time was used for, if anything. A Google search for the company’s name on Wednesday turned up only one result, a list of offshore “shelf companies” stating that Ultra Time had been incorporated on April 20, 2009.
Ms. Jia and her husband represent two of the most potent arms of the Chinese Communist Party. She is the daughter of China’s former minister of public security and chief prosecutor, Jia Chunwang, according to two people who have met the couple and who spoke on the condition of anonymity in order to preserve those relationships. Liu Lefei’s father oversees the country’s propaganda apparatus.
Liu Lefei heads one of China’s leading private equity firms and is a vice chairman of Citic Securities, the brokerage arm of the country’s biggest financial conglomerate. Ms. Jia was a banker at Merrill Lynch until 2014, according to online records from the Securities and Futures Commission of Hong Kong.
A woman who answered a Chinese cellphone number listed for Ms. Jia on the alumni website of Yale University, where she obtained an M.B.A., hung up after the caller identified himself as a New York Times reporter.
The consortium of journalists also reported that Lee Shing Put, a son-in-law of Mr. Zhang, the seventh-ranking person on the Politburo Standing Committee, was a shareholder in Zennon Capital Management, registered in the British Virgin Islands, and two other companies, Sino Reliance Networks and Glory Top Investments.
Zennon Capital Management is the owner of a Hong Kong company that has the same name as an entity of which Mr. Lee is a director, according to Hong Kong’s company registry. No information could be found on Sino Reliance Networks and Glory Top Investments, although a Hong Kong-registered company also is named Glory Top Investments.
The website of the Washington-based Brookings Institution, which tracks China’s top leaders, says Mr. Lee is a son of the founding chairman of Xinyi Glass Holdings, which is listed on the Hong Kong Stock Exchange.
Lee Shing Put did not respond to an email request for an interview made through Xinyi’s public relations company.
Mr. Deng, Mr. Xi’s brother-in-law, did not reply to faxed questions about his offshore holdings sent to the family’s office in Shenzhen, in southern China.
http://www.nytimes.com/2016/04/07/world/asia/china-panama-papers.html?smid=tw-share&_r=1